So I've been pondering a major debate for all newlyweds and young professionals, and thought I would do so transparently and systematically here. I've been debating the age old question of whether tis better to suffer the slings and arrows ... no wait, wrong venue. Whether to rent or buy. Yeah, that's it.
You see, my husband and I are have been living together for about four years now. (Quick math majors, how many years of living in sin? Riiight.) We've moved from the top two floors of a house to a two story townhouse to a large two bedroom apartment. To some this may seem like we're moving backwards; you're supposed to move from tract housing to condo to townhouse to house, right? But we've maintained roughly the same rent--if anything it's gone up-- and square footage--from 950 square feet in the house to 1,400 square feet in the townhouse. We've lived quite comfortably with progressively nicer amenities and locales. I think we've done quite nicely.
Lately, though, I've been feeling pressure from my family and others to start looking into buying a house. After all, it's the buyer's market! We should be stocking money away so we can buy a cute little home to have our babies in.
I feel the allure. I do love living in a house with land. I want a fireplace and a front porch and a driveway and a backyard. I want the space to live without worrying if my high heels on the floor are bothering my neighbors. I want to be able to blast the music without having to worry about waking up the toddler next door.
My hesitation is whether we need to buy a house to get what we need. I think renting a house provides all of the benefits without the drawbacks of home ownership. Consider this article: Economics 21 Renting v. Buying. The article discusses that while the perception is that, beyond being the "American Dream"-- I thought that was starring in your own reality show or getting a gold medal or becoming president--home ownership actually holds fewer actual benefits than purported. We might get mortgage tax benefits and the like, but in the end, the overall economic benefits of home ownership fail to trump the benefits of renting.
While the common wisdom is that renting is just throwing money away, when you could be "investing" that money in home ownership, the truth is, both schemes involve handing money over. Consider that even if you buy a house, unless you are buying it directly with cash, you are always renting in some capacity: "The choice is between renting the property directly or instead renting the capital necessary to buy the property." The majority of the money you pay off on your mortgage, toward "home equity", is just an "added expense that renters don't have."
And that home equity is not the only added expense that home owners have. They have to pay for all repairs out of pocket, and all services such as gas, water, and trash pickup are added expenses each month. Most rental companies will include these services and repairs in the price of the rental. Home owners also must usually buy all of the appliances in their home, whereas most rentals include these with the house. Further, few homes provide the amenities that apartments or even townhome rentals provide, such as pool and gym access.
So why buy? If you want to live in a house, why not just rent? The costs-benefit analysis on a purely economic scale favors renting, unless you can pay outright or are likely to stay in the home far beyond the length of the mortgage. So why do so many still buy their homes?
For me, I guess it would be the sense of being settled, of finally fully belonging somewhere and having it belong to you. Any changes you make to the property are fully your choice and responsibility. You are less likely to pull up roots and move. You have more of a sense of security (assuming you can make the payments continuously and don't have the threat of foreclosure over your head as so many do these days).
What else? Why do so many of us want our own homes?
A house used to be a solid investment before the bubble burst. You could sell a house, use profits to pay off any accrued debts, and still have enough to start over again somewhere else. Property values being what they are, financial insecurity being what it is, I can't contemplate buying a home, even if I want to, for the simple reason that it is far too easy to lose. If you can't sell it, it's a lodestone of debt and taxes, and if you try to rent it out as you move elsewhere, that may not be much better.
ReplyDeleteBuying a home, like going to college, were the things expected of the the "new" middle class which it existed, the place where a skilled blue collar worker could be financially viable and manage to support a large family through skills which didn't require a college degree to acquire. Those jobs no longer exist in America. They have either been outsources to countries with laxer labor laws or countries with stricter ones, who don't have management at the top paying a pittance for labor.
We want homes because we were taught we should, because it's expected, not because of the value of the thing itself.